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Abbott announces hospital board plan

AM - Tuesday, 2 October , 2007 08:00:00

Reporter: Chris Uhlmann

TONY EASTLEY: Public hospitals have emerged as a key battleground in the federal election, with the Howard Government now proposing to devolve their management to local communities.

The Health Minister, Tony Abbott, says the next Commonwealth-State health care agreement will require States to change hospital governance arrangements so that each has a local chief executive, accountable to a local board.

It's an attempt to trump Labor's policy, which proposes a federal government takeover of Australia's hospitals after 2009, should the States fail to improve standards.

Details of the Government's proposal are still scant, but the Health Minister, Tony Abbott, spoke with our Chief Political Correspondent, Chris Uhlmann.

TONY ABBOTT: The whole problem in hospitals, as we're witnessing at Royal North Shore at the moment, is not so much lack of money but lack of good management, and if we had management decisions made much closer to the people affected by them, ultimately we would get a better quality of decision making.

CHRIS UHLMANN: And what would happen if the State Governments didn't agree to this proposal?

TONY ABBOTT: Well, I'm confident that the State Governments will ultimately agree because they need the money. At the moment the Commonwealth is providing about 40 per cent of public hospital funding. We certainly expect to continue to provide very large amounts of public hospital funding, but we think if we're going to keep providing this money we should have at least some say over the governance of public hospitals, and we think that the best way to ensure public hospitals are well governed is to have these authoritative local hospital boards.

CHRIS UHLMANN: So wouldn't this model, though, still see two providers of funding - the State Government and the Commonwealth Government? Wouldn't it be better, overall, if there was a single funder?

TONY ABBOTT: Um, in the end, as far as the hospital is concerned, it gets a global budget, and the fact that some of the money that comes to the hospital is provided by the Federal Government, some of the money is provided by the State Government, it doesn't really matter at the local hospital level. What matters at the local hospital level is that they have a budget and it needs to be well administered.

And the problem is that, in many cases, it's not currently well administered because local people have no real control over what's happening at the local hospital. Significant decisions have to go up the line to the director general or to the minister's office, they tend to get log-jammed, problems fester, staff get demoralised.

Now, what the Federal Government is going to insist upon is that the hospitals get a budget and the budget will then be managed from that point on by the local board and the local CEO.

CHRIS UHLMANN: But isn't part of the problem of what we're seeing with acute care, around the western world, just not around Australia, that we're seeing health costs run far ahead of the rate of inflation, so in the end, no matter how you manage a hospital system, it's always going to be short of cash, there are always going to be problems?

TONY ABBOTT: There is some point in what you're saying, Chris. Yes, there is in a sense never going to be enough money in public hospitals to do all the worthy things that some people would like, but given finite resources, it's important that they are effectively managed. And the closer to the people affected by the decision, those decisions are made, the better for everyone.

CHRIS UHLMANN: Local control, though, will do nothing to alleviate the staff shortages that a lot of hospitals have with nurses, with doctors.

TONY ABBOTT: Well, the interesting thing is that the local CEO, under the local board, will have authority to hire and fire, will have authority to deploy the budget in ways that he or she thinks fit, and if that means rejigging spending priorities in favour of staff, that's something that ought to be available to that person.

The other thing about this model of local autonomy is that any money that they are able to raise locally will stay in the hospital. At the moment, particularly in New South Wales, if the local hospital raises extra money, either through treating private patients or through local fundraising, there's a very serious risk that that money will be grabbed by head office and taken away from them.